Improving Financial Recordkeeping In A Small Town
(from Maine Townsman, February 1997)
by Michael L. Starn, Editor

Local officials in Dallas Plantation, population 161 according to the 1990 census, have discovered that even the very small community can improve its financial recordkeeping with the help of computers.

A little over four years ago, the plantation's financial records were in need of improvement. The first assessor and treasurer were not reelected and a new treasurer, George Adams, stepped in. Retired for three years, Adams brought with him 20 years of professional engineering experience in a large corporation and a penchant for computers. He emphasizes, however, that a professional background is not a requirement for local government service.

"My first year was a learning process," says Adams, "since I had had little prior governmental bookkeeping experience."

Near Rangeley and in the shadows of Saddleback Mountain, Dallas Plantation is a small municipality by most standards. Nonetheless, the plantation has an annual budget of about $400,000 and maintains a fund balance, or surplus, of about $50,000. There are about 700 tax parcels on its property tax list. One quarter of the property owners are year-round residents and three-quarters are part-time or non-residents.

The plantation has a three member board of assessors, and a town clerk, road commissioner, tax collector and treasurer, all of whom are elected annually. The plantation's fiscal year runs from July to June.

"At the time I was elected, the treasurer's job was to write checks and make deposits," said Adams. The first assessor kept a record of balances in the plantation's various ledger accounts, according to Adams.

Once he got his feet wet in the new job, Adams began to look for ways to improve the plantation's financial recordkeeping. The first thing he did was to purchase an "off the shelf" checkbook program called Quicken for about $25. The plantation didn't have a computer, so Adams used his own 386 desktop PC with an 80 megabyte hard drive.

"I try to utilize the latest version of the Quicken software available," Adams says. He now uses the Windows 95 operating system on his 486 laptop.

The Dallas Plantation treasurer categorizes and maintains 30 principal financial accounts, including ones for administration, protection, health, highways, education and unclassified, and about 100 sub-accounts.

Balances in each account are adjusted as checks are written. At any time during the year, reasonably accurate predictions can be made of year-end balances based on the running totals.

Of particular value, says Adams, are the running balances in the highway accounts. "Being able to determine if money is available for unforeseen road expenses is especially helpful to the assessors and road commissioner," he says. Additionally, escrow accounts are maintained for paving, road equipment and truck purchases.

The computerized recordkeeping has also enabled plantation officials to maintain a past history of expenditures in the various accounts, which now extends to four years. "The integrity of these accounts with accurate recordkeeping facilitates long range planning and budgeting for all town expenditures, both large and small," Adams says.

Adams is now looking for ways to better utilize the computer for budgeting purposes. "Monthly financial statements could easily be printed using the Quicken software program," he says. The statements would show an account's running balance, the budgeted amount for the current year, the prior year's expenditure to that particular date, and a projected balance for the entire fiscal year.

"I presently report only verbally of any danger signs in the account balances," Adams says. "The absence of a more formal procedure is probably due to the confidence that the assessors have in my work." He anticipates that a more formal reporting system will be established in the near future.

All checks written for Dallas Plantation are run off a computer printer. "It adds credibility and gives a professional appearance to town operations," says Adams. He adds that it also results in fewer mistakes and makes check writing less time consuming.

The town pays two employees biweekly and a total of seven each quarter. For the past two years the municipality's payroll records have been administered using QuickPay, a payroll software program that cost about $40. QuickPay tracks year-to-date totals of five different deductions and is integrated with the Quicken checkbook program to allow for seamless debiting of appropriate expenditure accounts.

Withholding deductions for each paycheck are determined by tax tables stored on the computer's hard disk, and year-to-date totals are printed on the voucher accompanying each check. "This makes it relatively easy to determine quarterly withholding payments as well as year-end totals for W-2 forms," says Adams.

The Dallas Plantation treasurer subscribes to a tax table update service for $40 a year so that employee withholding amounts are kept current with the law. While not part of deductions, amounts that are paid to private contractors are also readily accessed from the computer records for submitting 1099 forms to the IRS—a subcategory called contract labor makes this possible.

Adams maintains a separate set of accounts that track appropriations and provides the opening balances for the checkbook accounts. If need be, the treasurer can move money between these accounts.   "Transferring money between these and other accounts is an easy process," says Adams.

"With today's technology, cost is not a limiting factor to utilizing computers for tracking small town finances," says Adams. Mostly, it's dependent on the willingness of some local resident to undertake the task."

Adams believes that any small Maine community could, and should, improve its financial recordkeeping through computerization. He says, "In these days of advancing technology, formalization of the movement of money in a small town through the use of a computer and an inexpensive checkbook program is a must. Accuracy, ease of operation, history of records, and credibility are all enhanced and improved. No town should be without a computer. They are an invaluable part of today's world."

Financial Accounts

The following account subcategories are utilized by Dallas Plantation treasurer George Adams on his 486 laptop PC using Quicken computer software.

Common Schools

Administration

Bus Driver

Education Subsidy

Miscellaneous

Town Appropriations

Summer Roads

Contract Work

Road Materials

Opening Balance

Supplies

Town Appropriations

Town Truck

Wages